Habendum Clause

Habendum Clause: Definition and Practical Guide

Key takeaways
* A habendum clause specifies the rights, interests, and duration of ownership or possession conveyed by a property-related contract.
* In real estate, it describes the type and any restrictions on title (often beginning “To have and to hold”).
* In oil and gas leases, it defines the primary term (fixed period) and the secondary term (continues only while production exists).
* When reviewing contracts, focus on duration, conditions for continuation or reversion, transfer restrictions, and the scope of rights granted.

What is a habendum clause?
A habendum clause is a standard section of deeds, leases, and similar property agreements that defines what is being granted and for how long. It commonly opens with the phrase “To have and to hold,” which is why it’s sometimes called the “to have and to hold clause.” Its wording determines the nature of the interest transferred (ownership, leasehold, mineral rights, etc.) and any limits on that interest.

Habendum clauses in real estate
* Leases: The clause explains the lessee’s rights and the extent of possession or use granted by the landlord.
* Purchases: The clause indicates the type of title conveyed—often fee simple absolute, which is the broadest private ownership subject only to government powers and encumbrances. When fee simple absolute is granted, the buyer generally has full rights to sell, bequeath, or use the property.
* Exceptions and limits: Not all habendum clauses convey unlimited ownership. They can include time limits (e.g., a 100-year cap on transferability), partial ownership (timeshares), life estates (reversion on death), or other restrictions that affect value and transferability.

Habendum clauses in oil and gas leases
In oil and gas contexts, the habendum clause typically establishes:
* Primary term: A fixed period (commonly 1–10 years) during which the lessee holds the lease without being required to commence production.
* Secondary term: If production begins during the primary term, the lease continues for as long as production is maintained—often phrased as “and so long thereafter as oil or gas is produced.”
This structure protects lessors by allowing the lease to expire if no production occurs, and it protects lessees by preserving rights once they invest and produce.

Why the habendum clause matters
* Determines duration and stability: It controls how long an interest lasts and under what conditions it continues or terminates.
* Affects marketability: Restrictions or reversionary provisions can reduce a property’s value or complicate future transfers.
* Allocates risk: In mineral leases, it balances the lessor’s need for development against the lessee’s need for a protected operating term.

Practical tips for review
When examining a habendum clause, check:
* Exact wording of duration and trigger events (what counts as “production” or “use”).
* Whether title is fee simple absolute or a limited/conditional estate.
* Any reversionary conditions, time caps, or life-based terms.
* Transfer and assignment restrictions.
* How the clause interacts with other contract provisions (e.g., royalty clauses, maintenance obligations).

Conclusion
The habendum clause is a concise but powerful part of property and mineral contracts. Its specific language determines the type and duration of the interest conveyed and can materially affect value and rights. Careful review—often with legal counsel—is important whenever buying, leasing, or selling property or mineral rights.